Over the last five years, the cost of providing energy from solar and wind power plants has dropped dramatically. Recently, in many places, it has
dropped in price below coal or natural gas (fracking).
Utility executives say the trend has accelerated this year, with several companies signing contracts, known as power purchase agreements, for solar or wind at prices below that of natural gas, especially in the Great Plains and Southwest, where wind and sunlight are abundant.
An example of the good year wind and solar had:
In Texas, Austin Energy signed a deal this spring for 20 years of output from a solar farm at less than 5 cents a kilowatt-hour. In September, the Grand River Dam Authority in Oklahoma announced its approval of a new agreement to buy power from a new wind farm expected to be completed next year. Grand River estimated the deal would save its customers roughly $50 million from the project.
That's in Texas! That's the good news. The bad news is that,
as with virtually all new technologies and energy sources developed and used in the history of the United States, much of renewable energy's progress has thus far been buoyed by large government subsidies. The phrase
large government subsidies makes Republicans lose the ability to control the volume of their voices and many of those voices were elected this past month. They don't care about the history of things:
Since the end of the Civil War/Reconstruction Era, tremendous subsidies have continued to flow to the coal industry. However, since our aim in this paper is to discuss government subsidies to the various energy sectors in their early days, we will not return to a lengthy discussion of later government support for the coal industry. Suffice it to say, domestic coal did not arrive on the scene as a mature, low-cost and competitive fuel source. Rather, government support over many years helped to turn it from a local curiosity in Schuylkill County, Pennsylvania into the dominant fuel source of its time.
With all that said, there are great things happening
right now in making more environmentally friendly energy affordable:
The price drop extends to homeowners and small businesses as well; last year, the prices for residential and commercial projects fell by roughly 12 to 15 percent from the year before.
The wind industry largely tells the same story, with prices dropping by more than half in recent years. Emily Williams, manager of industry data and analytics at the American Wind Energy Association, a trade group, said that in 2013 utilities signed “a record number of power purchase agreements and what ended up being historically low prices.”
Hopefully people will not be fooled into believing that the work of subsidizing these energy solutions is over. These are new technologies that have many hurdles to overcome if they are to be truly competitive in the marketplace.
Experts and executives caution that the low prices do not mean wind and solar farms can replace conventional power plants anytime soon.
“You can’t dispatch it when you want to,” said Khalil Shalabi, vice president for energy market operations and resource planning at Austin Energy, which is why the utility, like others, still sees value in combined-cycle gas plants, even though they may cost more. Nonetheless, he said, executives were surprised to see how far solar prices had fallen. “Renewables had two issues: One, they were too expensive, and they weren’t dispatchable. They’re not too expensive anymore.”